Apollo Pharma Inc. D/B/A East Broadway Pharmacy, DAB CR6360 (2023)

DECISION

National Supplier Clearinghouse (NSC), an administrative contractor for Respondent, the Centers for Medicare & Medicaid Services (CMS), revoked the Medicare supplier number for Durable Medical Equipment, Prosthetics, Orthotics and Supplies (DMEPOS) of Petitioner, Apollo Pharma Inc., pursuant to 42 C.F.R. §§ 424.57(e), 424.535(a)(1), 424.535(g) and 405.800.  NSC premised this revocation action on Petitioner’s noncompliance with supplier standards found at 42 CFR §§ 424.57(c)(2) and (c)(22).  Petitioner challenges this revocation before me.  Because the record confirms Petitioner’s noncompliance under 42 C.F.R. §§ 424.57(c)(2) and (c)(22), I affirm CMS’s revocation action.

I.   Background and Procedural History

Petitioner is a DMEPOS supplier that was enrolled in the Medicare program.  CMS Ex. 1.  On May 21, 2018, Petitioner filed a Form CMS-855S change of information application to update its address, surety bond information, liability insurance information, and business location.  Id.  In that application, Petitioner asserted it was exempt from accreditation as the products and supplies it provided did not require accreditation.  Id. at 5-6.  Petitioner did not indicate it provided Blood Glucose Monitors, a product requiring

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accreditation.  Id. at 6.  NSC confirmed and memorialized Petitioner’s application changes on July 17, 2018.  CMS Ex. 2.

Petitioner submitted claims for the provision of Blood Glucose Monitors from approximately August 1, 2019 through February 27, 2020.  CMS Ex. 4 at 2; CMS Ex. 14.  On April 28, 2020, NSC notified Petitioner of the revocation of its billing privileges as of December 16, 2019, pursuant to 42 C.F.R. §§ 405.800, 424.57(d)(11), 424.57(e), 424.535(a)(1), and 424.535(g), relying on 42 C.F.R. §§ 424.57(c)(2), (22) and (26).¹  CMS Ex. 5.

Seeking reinstatement of its billing privileges, Petitioner submitted a Corrective Action Plan (CAP) request to NSC, asserting the cited deficiencies were clerical in nature and did not constitute wrongdoing.  CMS Ex. 6 at 1.  NSC disagreed and denied Petitioner’s CAP request, concluding it made no errors in its initial revocation determination.  CMS Ex. 10 at 5.

Petitioner also asked NSC to reconsider its initial revocation action for the same reasons.  CMS Ex. 8.  Petitioner argued it complied with 42 C.F.R. § 424.57(c)(26), explaining its surety bond only lapsed due to a clerical error committed by its insurance company, which subsequently reinstated Petitioner’s coverage back to the cancellation date.  Id. at 2-3.  Petitioner also contends it complied with 42 C.F.R. § 424.57(c)(2) because it in fact updated its supplier information with NSC in July 2018 to indicate it provided diabetic supplies and services.  Id. at 3.  Finally, Petitioner claims it did not run afoul of the requirements of 42 C.F.R. § 424.57(c)(22) because it inadvertently billed the Medicare program for Blood Glucose Monitors when it intended to bill a state Medicaid program, citing the similar billing codes as the source of error.  Id.  Petitioner explained it would nevertheless seek accreditation to fully comply with Medicare requirements and reiterated steps it had taken to ensure its staff complied with Medicare billing rules, including training and auditing by a third-party vendor.  Id.

On August 25, 2020, NSC issued an unfavorable reconsidered determination, explaining it accepted Petitioner’s proof of compliance with 42 C.F.R. § 424.57(c)(26) but rejected Petitioner’s arguments concerning its noncompliance with sections § 424.57(c)(2) and (c)(22).  CMS Ex. 12 at 5.  NSC subsequently revised its reconsidered determination to clarify Petitioner’s effective date of revocation was May 28, 2020, 30 days after NSC issued its initial notice of revocation letter.  CMS Ex. 13 at 4.

Petitioner timely requested a hearing before an Administrative Law Judge in the Civil Remedies Division on October 23, 2020, resulting in my designation to hear and decide

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this case.  On October 27, 2020, I issued an Acknowledgment and Pre-hearing Order (Pre-hearing Order) setting forth a briefing schedule.  CMS submitted a brief and motion for summary judgment (CMS Br.) along with 14 proposed exhibits (CMS Exs. 1-14) on December 31, 2020.  Petitioner filed a brief and its response to CMS’s motion for summary judgment (P. Br.) and proposed five exhibits (P. Ex. 1-5).  Petitioner subsequently filed an additional document to verify its accredited status.  It did not properly label or paginate this document or seek leave to supplement the record.  Nevertheless, I construe this submission as a proposed supplemental exhibit and identify it herein as P. Ex. 6.

CMS filed objections (CMS Obj.) and a reply (CMS Reply) to Petitioner’s brief and exhibits.  CMS objects to all of Petitioner’s exhibits as either irrelevant, improperly submitted “new” evidence (meaning Petitioner did not present it at the reconsideration level), or both.  CMS Obj. at 2-3; see also 42 C.F.R. § 498.56(e)(2)(ii).  I overrule CMS’s objections and admit Petitioner’s exhibits for the limited purpose of addressing Petitioner’s arguments.  Petitioner did not object to CMS’s exhibits.  I admit Petitioner’s Exhibits 1 through 6 and CMS Exhibits 1 through 15 into the record.

II.   Decision on the Record

My Pre-hearing Order required the parties to submit written direct testimony for each proposed witness and advised I would only hold an in-person hearing if a party requested an opportunity to cross-examine the opposing party’s witness(es).  Pre‑hearing Order ¶¶ 8, 10; Civ. Remedies Div. P. §§ 16(b), 19(b); Pacific Regency Arvin, DAB No. 1823 at 8 (2002).

CMS identified no witnesses while Petitioner submitted the written direct testimony for one witness.  CMS did not seek to cross-examine Petitioner’s witness.  I therefore issue this decision based on the written record before me.  Civ. Remedies Div. P. § 19(b).  CMS’s motion for summary judgment is denied as moot.

III.   Issue

Whether CMS has a legitimate basis to revoke Petitioner’s DMEPOS supplier number pursuant to 42 C.F.R. § 424.57(c)(2) and (22).

IV.   Jurisdiction

I have jurisdiction to decide this case.  42 C.F.R. §§ 493.3(b)(17), 498.5(l)(2).

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V.   Findings of Fact, Conclusion of Law, and Analysis

A. Applicable Law

The Social Security Act authorizes the Secretary to establish and implement standards DMEPOS suppliers must comply with to furnish any item or service that receives payments or to retain a supplier number used to submit claims for reimbursement.  42 U.S.C. § 1395m(a)(20)(A).  These standards are enforced by independent accreditation organizations; suppliers must submit evidence of compliance with these standards by obtaining accreditation from a designated accreditation organization.  42 U.S.C. § 1395m(a)(20)(F).

A supplier must certify in its enrollment application that it meets and will continue to meet certain standards outlined in 42 C.F.R. § 424.57(c).  Subsection 424.57(c)(2) requires DMEPOS suppliers to have “not made, or caused to be made, any false statement or misrepresentation of material fact on its application for billing privileges.”  42 C.F.R. § 424.57(c)(2).  Additionally, DMEPOS suppliers must report any changes in information supplied on the application within 30 days.  42 C.F.R. § 424.57(c)(2).

Section 424.57(c)(22) requires all suppliers that provide DMEPOS and other items and services to be accredited by a CMS-approved accreditation organization.  42 C.F.R. § 424.57(c)(22).  The supplier’s accreditation must identify “specific products and services, for which the supplier is accredited” for the supplier to receive payment.  Id.  CMS may revoke the billing privileges of a supplier who fails to meet the standards set forth at section 424.57(c).  42 C.F.R. § 424.57(e).

B. Discussion.

1. CMS has a valid basis under 42 C.F.R. § 424.57(c)(2) to revoke Petitioner’s DMEPOS supplier number because Petitioner made a false statement or misrepresentation of material fact on its application for billing privileges.

Petitioner does not dispute it submitted a CMS-855S form to NSC that failed to indicate it would bill for products requiring accreditation.  Petitioner instead argues the form was accurate because it did not intend to bill for such products, and any claims it submitted to the Medicare program for Blood Glucose Monitors resulted from a billing error after it purchased another pharmacy and combined its customer profiles and prescription data.  P. Br. at 4; see also CMS Ex. 8 at 3.  Petitioner explains it typically only supplies products that do not require accreditation and that its inadvertent billing for a product requiring accreditation should not provide a basis for revocation.  Id.  Petitioner points out that it has reversed any claim resulting from this billing error and offered to repay the nominal overpayment from the Medicare program.  Id. at 6-7.  Additionally, Petitioner notes that

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as a precautionary measure, it has sought and obtained accreditation, despite the fact it typically does not supply products or services requiring it.  Id. at 7.

CMS maintains section (c)(2) permits it to revoke Petitioner’s supplier status, observing that Petitioner did not indicate in its CMS-855S form that it intended to provide items requiring accreditation like glucose monitors, yet later submitted claims to Medicare for them.  CMS Br. at 11.  CMS disputes Petitioner’s claim that it was exempt from accreditation, since Petitioner did in fact supply items requiring accreditation, even if it did so inadvertently.  CMS Reply at 2.

CMS is ultimately correct.  42 C.F.R. § 424.57(c)(2) requires DMEPOS suppliers to have “not made, or caused to be made, any false statement or misrepresentation of material fact on its application for billing privileges.”  The regulation also requires a supplier to report any changes in information supplied on the application within 30 days.  42 C.F.R. § 424.57(c)(2).  Here, Petitioner submitted its CMS-855S to update its change in address, indicated it was exempt from accreditation, and did not indicate it would bill for Blood Glucose Monitors.  CMS Ex. 1 at 5, 6.  Petitioner subsequently submitted claims for these devices to the Medicare program.  CMS Ex. 4; CMS Ex. 14.

I fully credit Petitioner’s explanation for this discrepancy and am persuaded Petitioner did not intend to bill the Medicare program for the provision of items requiring accreditation.  Unfortunately, my review is limited to whether CMS had a legitimate basis to revoke, not whether I believe it proper to do so.  Fady Fayad, M.D., DAB No. 2266 at 16 (2009).  The record confirms the factual basis relied upon by CMS to revoke Petitioner’s supplier status.  It also confirms CMS considered the arguments made by Petitioner and rejected them.  I may not substitute my discretion for that of CMS and must affirm CMS’s determination.

2. CMS has a valid basis under 42 C.F.R. § 424.57(c)(22) to revoke Petitioner’s DMEPOS supplier number because Petitioner failed to comply with the accreditation requirement at the time of revocation.

Petitioner reiterates its belief CMS did not have a basis to revoke its supplier status because it never intended to bill the Medicare program for Blood Glucose Monitors and was therefore exempt from the accreditation requirement associated with those devices. P. Br. at 7.  Petitioner also points out it has gained accreditation as of July 2021 in its ongoing effort to avoid similar mishaps in the future.  P. Br. at 7; P. Ex. 6.

CMS observes Petitioner has conceded it billed the Medicare program for Blood Glucose Monitors without being accredited to do so, and that the various reasons cited by Petitioner, including acquisition of a new location and billing software issues, are irrelevant to whether Petitioner complied with section 42 C.F.R. § 424.57(c)(22).  CMS

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Reply at 4.  CMS also contends Petitioner’s subsequent accreditation has no bearing on its accreditation status at the time of revocation.  CMS Br. at 13.

I again fully credit Petitioner’s explanation for inadvertently billing the Medicare program for items requiring accreditation it did not have.  I also credit Petitioner’s effort to minimize future instances of inadvertent billing by seeking out accreditation, though CMS is correct that this action has no relevance to the basis for revocation.  The record is clear that Petitioner submitted claims to the Medicare program for Blood Glucose Monitors, an item requiring accreditation, but was not accredited at the time it did so.  Petitioner has made arguments that might persuade a reasonable decision-maker to consider alternatives to revocation.  Unfortunately, I am limited to assessing whether CMS had a factual basis to exercise its discretion to revoke Petitioner’s status as a supplier to the Medicare program under section 424.57(c)(22).  CMS has done so.  I cannot now substitute my judgment for that of CMS, no matter how persuasive I find Petitioner’s arguments.

3. I do not have authority to review CMS’s enrollment determination or the length of the enrollment bar.

Petitioner cites previous cases with similar circumstances to argue that a two-year revocation is not warranted.  P. Br. at 8; P. Ex. 4; P. Ex. 5.  However, even if Petitioner has demonstrated CMS has treated other suppliers differently, I cannot substitute my judgment in the determination of whether revocation is appropriate.  Letantia Bussell, M.D., DAB No. 2196 at 12, 13 (2008).  Additionally, the length of the re-enrollment bar is not an appealable “initial determination” within my jurisdiction.  Vijendra Dave, M.D., DAB No. 2672 at 11 (2016).

4. The effective date of Petitioner’s revocation is May 28, 2020.

I have determined CMS had a valid basis under 42 C.F.R. §§ 424.75(c)(2) and (22) to revoke Petitioner’s DMEPOS supplier number.  Under 42 C.F.R. § 424.535(g), a revocation action is effective 30 days from the date of the notice of revocation.  Here, CMS’s revocation notice to Petitioner is dated April 28, 2020, making the effective date of revocation May 28, 2020.

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VI.   Conclusion

For the foregoing reasons, I affirm CMS’s revocation of Petitioner’s Medicare enrollment and billing privileges.

Endnotes

¹ 42 C.F.R. § 424.57(c)(2) requires a supplier to provide complete and accurate information in its application for billing privileges.  Subsection (c)(22) requires DMEPOS suppliers to be accredited to supply specific products or services.  Subsection (c)(26) demands suppliers meet surety bond requirements set forth at 42 C.F.R. § 424.57(d).